Do renters skimp on energy efficiency during economic recessions? Evidence from Northeast Scotland

Nan Liu (Corresponding Author), Yuan Zhao, Jiaqi Ge

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper investigates tenants' willingness to pay (WTP) for energy efficiency in the private rented housing sector. Using data from Aberdeen city and Shire in Scotland between the third quarter of 2013 and the second quarter of 2017, rent premiums of 2–11% associated with more energy efficient dwellings are found, and the magnitudes of these premiums are considerable compared to those of other physical attributes. Such premiums however, are significantly reduced during economic recession, suggesting that tenants' WTP for energy efficiency varies under different economic conditions. From a methodological perspective, the study uses a multilevel model, where the unobservable neighbourhood and age effects are approximated. Our results implicate that although tenants’ WTP for more energy efficient is present, there still might be a need for public strategy to facilitate the improvement of energy performance in the private rented sector.
Original languageEnglish
Pages (from-to)164-175
Number of pages12
JournalEnergy
Volume165
Issue numberPart A
Early online date15 Sep 2018
DOIs
Publication statusPublished - 15 Dec 2018

Fingerprint

Energy efficiency
Economics

Keywords

  • energy efficiency
  • split-incentives
  • private rented housing sector
  • rent premium
  • tenants willingness to pay
  • economic recess

Cite this

Do renters skimp on energy efficiency during economic recessions? Evidence from Northeast Scotland. / Liu, Nan (Corresponding Author); Zhao, Yuan; Ge, Jiaqi.

In: Energy, Vol. 165 , No. Part A, 15.12.2018, p. 164-175.

Research output: Contribution to journalArticle

@article{f9e03264876f485eb4cc31810296a10d,
title = "Do renters skimp on energy efficiency during economic recessions? Evidence from Northeast Scotland",
abstract = "This paper investigates tenants' willingness to pay (WTP) for energy efficiency in the private rented housing sector. Using data from Aberdeen city and Shire in Scotland between the third quarter of 2013 and the second quarter of 2017, rent premiums of 2–11{\%} associated with more energy efficient dwellings are found, and the magnitudes of these premiums are considerable compared to those of other physical attributes. Such premiums however, are significantly reduced during economic recession, suggesting that tenants' WTP for energy efficiency varies under different economic conditions. From a methodological perspective, the study uses a multilevel model, where the unobservable neighbourhood and age effects are approximated. Our results implicate that although tenants’ WTP for more energy efficient is present, there still might be a need for public strategy to facilitate the improvement of energy performance in the private rented sector.",
keywords = "energy efficiency, split-incentives, private rented housing sector, rent premium, tenants willingness to pay, economic recess",
author = "Nan Liu and Yuan Zhao and Jiaqi Ge",
year = "2018",
month = "12",
day = "15",
doi = "10.1016/j.energy.2018.09.078",
language = "English",
volume = "165",
pages = "164--175",
journal = "Energy",
issn = "0360-5442",
publisher = "Elsevier",
number = "Part A",

}

TY - JOUR

T1 - Do renters skimp on energy efficiency during economic recessions? Evidence from Northeast Scotland

AU - Liu, Nan

AU - Zhao, Yuan

AU - Ge, Jiaqi

PY - 2018/12/15

Y1 - 2018/12/15

N2 - This paper investigates tenants' willingness to pay (WTP) for energy efficiency in the private rented housing sector. Using data from Aberdeen city and Shire in Scotland between the third quarter of 2013 and the second quarter of 2017, rent premiums of 2–11% associated with more energy efficient dwellings are found, and the magnitudes of these premiums are considerable compared to those of other physical attributes. Such premiums however, are significantly reduced during economic recession, suggesting that tenants' WTP for energy efficiency varies under different economic conditions. From a methodological perspective, the study uses a multilevel model, where the unobservable neighbourhood and age effects are approximated. Our results implicate that although tenants’ WTP for more energy efficient is present, there still might be a need for public strategy to facilitate the improvement of energy performance in the private rented sector.

AB - This paper investigates tenants' willingness to pay (WTP) for energy efficiency in the private rented housing sector. Using data from Aberdeen city and Shire in Scotland between the third quarter of 2013 and the second quarter of 2017, rent premiums of 2–11% associated with more energy efficient dwellings are found, and the magnitudes of these premiums are considerable compared to those of other physical attributes. Such premiums however, are significantly reduced during economic recession, suggesting that tenants' WTP for energy efficiency varies under different economic conditions. From a methodological perspective, the study uses a multilevel model, where the unobservable neighbourhood and age effects are approximated. Our results implicate that although tenants’ WTP for more energy efficient is present, there still might be a need for public strategy to facilitate the improvement of energy performance in the private rented sector.

KW - energy efficiency

KW - split-incentives

KW - private rented housing sector

KW - rent premium

KW - tenants willingness to pay

KW - economic recess

U2 - 10.1016/j.energy.2018.09.078

DO - 10.1016/j.energy.2018.09.078

M3 - Article

VL - 165

SP - 164

EP - 175

JO - Energy

JF - Energy

SN - 0360-5442

IS - Part A

ER -